Académique Documents
Professionnel Documents
Culture Documents
175769-70 1 of 14
Thereafter, negotiations ensued between the parties in an effort to reach a settlement; however, the negotiations
were terminated on April 4, 2002 by ABS-CBN allegedly due to PMSIs inability to ensure the prevention of illegal
retransmission and further rebroadcast of its signals, as well as the adverse effect of the rebroadcasts on the
business operations of its regional television stations.
On May 13, 2002, ABS-CBN filed with the IPO a complaint for Violation of Laws Involving Property Rights,
with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, which was
docketed as IPV No. 10-2002-0004. It alleged that PMSIs unauthorized rebroadcasting of Channels 2 and 23
infringed on its broadcasting rights and copyright.
On July 2, 2002, the Bureau of Legal Affairs (BLA) of the IPO granted ABS-CBNs application for a temporary
restraining order. On July 12, 2002, PMSI suspended its retransmission of Channels 2 and 23 and likewise filed a
petition for certiorari with the Court of Appeals, which was docketed as CA-G.R. SP No. 71597.
Subsequently, PMSI filed with the BLA a Manifestation reiterating that it is subject to the must-carry rule under
Memorandum Circular No. 04-08-88. It also submitted a letter dated December 20, 2002 of then NTC
Commissioner Armi Jane R. Borje to PMSI stating as follows:
This refers to your letter dated December 16, 2002 requesting for regulatory guidance from this
Commission in connection with the application and coverage of NTC Memorandum Circular No. 4-08-
88, particularly Section 6 thereof, on mandatory carriage of television broadcast signals, to the direct-
to-home (DTH) pay television services of Philippine Multi-Media System, Inc. (PMSI).
Preliminarily, both DTH pay television and cable television services are broadcast services, the only
difference being the medium of delivering such services (i.e. the former by satellite and the latter by
cable). Both can carry broadcast signals to the remote areas, thus enriching the lives of the residents
thereof through the dissemination of social, economic, educational information and cultural programs.
The DTH pay television services of PMSI is equipped to provide nationwide DTH satellite services.
Concededly, PMSIs DTH pay television services covers very much wider areas in terms of carriage of
broadcast signals, including areas not reachable by cable television services thereby providing a better
medium of dissemination of information to the public.
In view of the foregoing and the spirit and intent of NTC memorandum Circular No. 4-08-88,
particularly section 6 thereof, on mandatory carriage of television broadcast signals, DTH pay
television services should be deemed covered by such NTC Memorandum Circular.
For your guidance. (Emphasis added)
On August 26, 2003, PMSI filed another Manifestation with the BLA that it received a letter dated July 24, 2003
from the NTC enjoining strict and immediate compliance with the must-carry rule under Memorandum Circular
No. 04-08-88, to wit:
Dear Mr. Abellada:
Last July 22, 2003, the National Telecommunications Commission (NTC) received a letter dated July
17, 2003 from President/COO Rene Q. Bello of the International Broadcasting Corporation (IBC-
Channel 13) complaining that your company, Dream Broadcasting System, Inc., has cut-off, without
any notice or explanation whatsoever, to air the programs of IBC-13, a free-to-air television, to the
ABS-CBN v. PMSI G.R. Nos. 175769-70 3 of 14
This Office also finds no evidence on record showing that the Appellant has provided decrypting means
to the public indiscriminately. Considering the nature of this case, which is punitive in fact, the burden
of proving the existence of the elements constituting the acts punishable rests on the shoulder of the
complainant.
Accordingly, this Office finds that there is no rebroadcasting on the part of the Appellant of the
Appellees programs on Channels 2 and 23, as defined under the Rome Convention.
Under the Rome Convention, rebroadcasting is the simultaneous broadcasting by one broadcasting organization of
the broadcast of another broadcasting organization. The Working Paper prepared by the Secretariat of the
Standing Committee on Copyright and Related Rights defines broadcasting organizations as entities that take the
financial and editorial responsibility for the selection and arrangement of, and investment in, the transmitted
content. Evidently, PMSI would not qualify as a broadcasting organization because it does not have the
aforementioned responsibilities imposed upon broadcasting organizations, such as ABS-CBN.
ABS-CBN creates and transmits its own signals; PMSI merely carries such signals which the viewers receive in its
unaltered form. PMSI does not produce, select, or determine the programs to be shown in Channels 2 and 23.
Likewise, it does not pass itself off as the origin or author of such programs. Insofar as Channels 2 and 23 are
concerned, PMSI merely retransmits the same in accordance with Memorandum Circular 04-08-88. With regard to
its premium channels, it buys the channels from content providers and transmits on an as-is basis to its viewers.
Clearly, PMSI does not perform the functions of a broadcasting organization; thus, it cannot be said that it is
engaged in rebroadcasting Channels 2 and 23.
The Director-General of the IPO and the Court of Appeals also correctly found that PMSIs services are similar to a
cable television system because the services it renders fall under cable retransmission, as described in the
Working Paper, to wit:
(G) Cable Retransmission
47. When a radio or television program is being broadcast, it can be retransmitted to new audiences by
means of cable or wire. In the early days of cable television, it was mainly used to improve signal
reception, particularly in so-called shadow zones, or to distribute the signals in large buildings or
building complexes. With improvements in technology, cable operators now often receive signals from
satellites before retransmitting them in an unaltered form to their subscribers through cable.
48. In principle, cable retransmission can be either simultaneous with the broadcast over-the-air or
delayed (deferred transmission) on the basis of a fixation or a reproduction of a fixation. Furthermore,
they might be unaltered or altered, for example through replacement of commercials, etc. In general,
however, the term retransmission seems to be reserved for such transmissions which are both
simultaneous and unaltered.
49. The Rome Convention does not grant rights against unauthorized cable retransmission. Without
such a right, cable operators can retransmit both domestic and foreign over the air broadcasts
simultaneously to their subscribers without permission from the broadcasting organizations or other
rightholders and without obligation to pay remuneration. (Emphasis added)
Thus, while the Rome Convention gives broadcasting organizations the right to authorize or prohibit the
rebroadcasting of its broadcast, however, this protection does not extend to cable retransmission. The
ABS-CBN v. PMSI G.R. Nos. 175769-70 8 of 14
retransmission of ABS-CBNs signals by PMSI which functions essentially as a cable television does not
therefore constitute rebroadcasting in violation of the formers intellectual property rights under the IP Code.
It must be emphasized that the law on copyright is not absolute. The IP Code provides that:
Sec. 184. Limitations on Copyright. -
184.1. Notwithstanding the provisions of Chapter V, the following acts shall not constitute infringement
of copyright:
xxxx
(h) The use made of a work by or under the direction or control of the Government, by the National
Library or by educational, scientific or professional institutions where such use is in the public interest
and is compatible with fair use;
The carriage of ABS-CBNs signals by virtue of the must-carry rule in Memorandum Circular No. 04-08-88 is
under the direction and control of the government though the NTC which is vested with exclusive jurisdiction to
supervise, regulate and control telecommunications and broadcast services/facilities in the Philippines. The
imposition of the must-carry rule is within the NTCs power to promulgate rules and regulations, as public safety
and interest may require, to encourage a larger and more effective use of communications, radio and television
broadcasting facilities, and to maintain effective competition among private entities in these activities whenever the
Commission finds it reasonably feasible. As correctly observed by the Director-General of the IPO:
Accordingly, the Must-Carry Rule under NTC Circular No. 4-08-88 falls under the foregoing
category of limitations on copyright. This Office agrees with the Appellant [herein respondent PMSI]
that the Must-Carry Rule is in consonance with the principles and objectives underlying Executive
Order No. 436, to wit:
The Filipino people must be given wider access to more sources of news, information,
education, sports event and entertainment programs other than those provided for by mass
media and afforded television programs to attain a well informed, well-versed and
culturally refined citizenry and enhance their socio-economic growth:
WHEREAS, cable television (CATV) systems could support or supplement the services
provided by television broadcast facilities, local and overseas, as the national information
highway to the countryside.
The Court of Appeals likewise correctly observed that:
[T]he very intent and spirit of the NTC Circular will prevent a situation whereby station owners and a
few networks would have unfettered power to make time available only to the highest bidders, to
communicate only their own views on public issues, people, and to permit on the air only those with
whom they agreed contrary to the state policy that the (franchise) grantee like the petitioner, private
respondent and other TV station owners, shall provide at all times sound and balanced programming
and assist in the functions of public information and education.
This is for the first time that we have a structure that works to accomplish explicit state
policy goals.
ABS-CBN v. PMSI G.R. Nos. 175769-70 9 of 14
Indeed, intellectual property protection is merely a means towards the end of making society benefit from the
creation of its men and women of talent and genius. This is the essence of intellectual property laws, and it explains
why certain products of ingenuity that are concealed from the public are outside the pale of protection afforded by
the law. It also explains why the author or the creator enjoys no more rights than are consistent with public welfare.
Further, as correctly observed by the Court of Appeals, the must-carry rule as well as the legislative franchises
granted to both ABS-CBN and PMSI are in consonance with state policies enshrined in the Constitution,
specifically Sections 9, 17, and 24 of Article II on the Declaration of Principles and State Policies.
ABS-CBN was granted a legislative franchise under Republic Act No. 7966, Section 1 of which authorizes it to
construct, operate and maintain, for commercial purposes and in the public interest, television and radio
broadcasting in and throughout the Philippines x x x. Section 4 thereof mandates that it shall provide adequate
public service time to enable the government, through the said broadcasting stations, to reach the population on
important public issues; provide at all times sound and balanced programming; promote public participation such
as in community programming; assist in the functions of public information and education x x x.
PMSI was likewise granted a legislative franchise under Republic Act No. 8630, Section 4 of which similarly states
that it shall provide adequate public service time to enable the government, through the said broadcasting stations,
to reach the population on important public issues; provide at all times sound and balanced programming; promote
public participation such as in community programming; assist in the functions of public information and
education x x x. Section 5, paragraph 2 of the same law provides that the radio spectrum is a finite resource that
is a part of the national patrimony and the use thereof is a privilege conferred upon the grantee by the State and
may be withdrawn anytime, after due process.
In Telecom. & Broadcast Attys. of the Phils., Inc. v. COMELEC, the Court held that a franchise is a mere privilege
which may be reasonably burdened with some form of public service. Thus:
All broadcasting, whether by radio or by television stations, is licensed by the government. Airwave
frequencies have to be allocated as there are more individuals who want to broadcast than there are
frequencies to assign. A franchise is thus a privilege subject, among other things, to amendment by
Congress in accordance with the constitutional provision that any such franchise or right granted . . .
shall be subject to amendment, alteration or repeal by the Congress when the common good so
requires.
xxxx
Indeed, provisions for COMELEC Time have been made by amendment of the franchises of radio and
television broadcast stations and, until the present case was brought, such provisions had not been
thought of as taking property without just compensation. Art. XII, 11 of the Constitution authorizes
the amendment of franchises for the common good. What better measure can be conceived for the
common good than one for free air time for the benefit not only of candidates but even more of the
public, particularly the voters, so that they will be fully informed of the issues in an election? [I]t is
the right of the viewers and listeners, not the right of the broadcasters, which is paramount.
Nor indeed can there be any constitutional objection to the requirement that broadcast stations give free
air time. Even in the United States, there are responsible scholars who believe that government controls
on broadcast media can constitutionally be instituted to ensure diversity of views and attention to
ABS-CBN v. PMSI G.R. Nos. 175769-70 10 of 14
public affairs to further the system of free expression. For this purpose, broadcast stations may be
required to give free air time to candidates in an election. Thus, Professor Cass R. Sunstein of the
University of Chicago Law School, in urging reforms in regulations affecting the broadcast industry,
writes:
xxxx
In truth, radio and television broadcasting companies, which are given franchises, do not own the
airwaves and frequencies through which they transmit broadcast signals and images. They are merely
given the temporary privilege of using them. Since a franchise is a mere privilege, the exercise of the
privilege may reasonably be burdened with the performance by the grantee of some form of public
service. x x x
There is likewise no merit to ABS-CBNs claim that PMSIs carriage of its signals is for a commercial purpose;
that its being the countrys top broadcasting company, the availability of its signals allegedly enhances PMSIs
attractiveness to potential customers; or that the unauthorized carriage of its signals by PMSI has created
competition between its Metro Manila and regional stations.
ABS-CBN presented no substantial evidence to prove that PMSI carried its signals for profit; or that such carriage
adversely affected the business operations of its regional stations. Except for the testimonies of its witnesses, no
studies, statistical data or information have been submitted in evidence.
Administrative charges cannot be based on mere speculation or conjecture. The complainant has the burden of
proving by substantial evidence the allegations in the complaint. Mere allegation is not evidence, and is not
equivalent to proof.
Anyone in the country who owns a television set and antenna can receive ABS-CBNs signals for free. Other
broadcasting organizations with free-to-air signals such as GMA-7, RPN-9, ABC-5, and IBC-13 can likewise be
accessed for free. No payment is required to view the said channels because these broadcasting networks do not
generate revenue from subscription from their viewers but from airtime revenue from contracts with commercial
advertisers and producers, as well as from direct sales.
In contrast, cable and DTH television earn revenues from viewer subscription. In the case of PMSI, it offers its
customers premium paid channels from content providers like Star Movies, Star World, Jack TV, and AXN, among
others, thus allowing its customers to go beyond the limits of Free TV and Cable TV. It does not advertise itself
as a local channel carrier because these local channels can be viewed with or without DTH television.
Relevantly, PMSIs carriage of Channels 2 and 23 is material in arriving at the ratings and audience share of ABS-
CBN and its programs. These ratings help commercial advertisers and producers decide whether to buy airtime
from the network. Thus, the must-carry rule is actually advantageous to the broadcasting networks because it
provides them with increased viewership which attracts commercial advertisers and producers.
On the other hand, the carriage of free-to-air signals imposes a burden to cable and DTH television providers such
as PMSI. PMSI uses none of ABS-CBNs resources or equipment and carries the signals and shoulders the costs
without any recourse of charging. Moreover, such carriage of signals takes up channel space which can otherwise
be utilized for other premium paid channels.
There is no merit to ABS-CBNs argument that PMSIs carriage of Channels 2 and 23 resulted in competition
ABS-CBN v. PMSI G.R. Nos. 175769-70 11 of 14
between its Metro Manila and regional stations. ABS-CBN is free to decide to pattern its regional programming in
accordance with perceived demands of the region; however, it cannot impose this kind of programming on the
regional viewers who are also entitled to the free-to-air channels. It must be emphasized that, as a national
broadcasting organization, one of ABS-CBNs responsibilities is to scatter its signals to the widest area of coverage
as possible. That it should limit its signal reach for the sole purpose of gaining profit for its regional stations
undermines public interest and deprives the viewers of their right to access to information.
Indeed, television is a business; however, the welfare of the people must not be sacrificed in the pursuit of profit.
The right of the viewers and listeners to the most diverse choice of programs available is paramount. The Director-
General correctly observed, thus:
The Must-Carry Rule favors both broadcasting organizations and the public. It prevents cable
television companies from excluding broadcasting organization especially in those places not reached
by signal. Also, the rule prevents cable television companies from depriving viewers in far-flung areas
the enjoyment of programs available to city viewers. In fact, this Office finds the rule more
burdensome on the part of the cable television companies. The latter carries the television signals and
shoulders the costs without any recourse of charging. On the other hand, the signals that are carried by
cable television companies are dispersed and scattered by the television stations and anybody with a
television set is free to pick them up.
With its enormous resources and vaunted technological capabilities, Appellees [herein petitioner ABS-
CBN] broadcast signals can reach almost every corner of the archipelago. That in spite of such
capacity, it chooses to maintain regional stations, is a business decision. That the Must-Carry Rule
adversely affects the profitability of maintaining such regional stations since there will be competition
between them and its Metro Manila station is speculative and an attempt to extrapolate the effects of
the rule. As discussed above, Appellants DTH satellite television services is of limited subscription.
There was not even a showing on part of the Appellee the number of Appellants subscribers in one
region as compared to non-subscribing television owners. In any event, if this Office is to engage in
conjecture, such competition between the regional stations and the Metro Manila station will benefit
the public as such competition will most likely result in the production of better television programs.
All told, we find that the Court of Appeals correctly upheld the decision of the IPO Director-General that PMSI did
not infringe on ABS-CBNs intellectual property rights under the IP Code. The findings of facts of administrative
bodies charged with their specific field of expertise, are afforded great weight by the courts, and in the absence of
substantial showing that such findings are made from an erroneous estimation of the evidence presented, they are
conclusive, and in the interest of stability of the governmental structure, should not be disturbed.
Moreover, the factual findings of the Court of Appeals are conclusive on the parties and are not reviewable by the
Supreme Court. They carry even more weight when the Court of Appeals affirms the factual findings of a lower
fact-finding body, as in the instant case.
There is likewise no merit to ABS-CBNs contention that the Memorandum Circular excludes from its coverage
DTH television services such as those provided by PMSI. Section 6.2 of the Memorandum Circular requires all
cable television system operators operating in a community within Grade A or B contours to carry the
television signals of the authorized television broadcast stations. The rationale behind its issuance can be found in
the whereas clauses which state:
ABS-CBN v. PMSI G.R. Nos. 175769-70 12 of 14
Whereas, Cable Television Systems or Community Antenna Television (CATV) have shown their
ability to offer additional programming and to carry much improved broadcast signals in the remote
areas, thereby enriching the lives of the rest of the population through the dissemination of social,
economic, educational information and cultural programs;
Whereas, the national government supports the promotes the orderly growth of the Cable Television
industry within the framework of a regulated fee enterprise, which is a hallmark of a democratic
society;
Whereas, public interest so requires that monopolies in commercial mass media shall be regulated or
prohibited, hence, to achieve the same, the cable TV industry is made part of the broadcast media;
Whereas, pursuant to Act 3846 as amended and Executive Order 205 granting the National
Telecommunications Commission the authority to set down rules and regulations in order to protect the
public and promote the general welfare, the National Telecommunications Commission hereby
promulgates the following rules and regulations on Cable Television Systems;
The policy of the Memorandum Circular is to carry improved signals in remote areas for the good of the general
public and to promote dissemination of information. In line with this policy, it is clear that DTH television should
be deemed covered by the Memorandum Circular. Notwithstanding the different technologies employed, both DTH
and cable television have the ability to carry improved signals and promote dissemination of information because
they operate and function in the same way.
In its December 20, 2002 letter, the NTC explained that both DTH and cable television services are of a similar
nature, the only difference being the medium of delivering such services. They can carry broadcast signals to the
remote areas and possess the capability to enrich the lives of the residents thereof through the dissemination of
social, economic, educational information and cultural programs. Consequently, while the Memorandum Circular
refers to cable television, it should be understood as to include DTH television which provides essentially the same
services.
In Eastern Telecommunications Philippines, Inc. v. International Communication Corporation, we held:
The NTC, being the government agency entrusted with the regulation of activities coming under its
special and technical forte, and possessing the necessary rule-making power to implement its
objectives, is in the best position to interpret its own rules, regulations and guidelines. The Court has
consistently yielded and accorded great respect to the interpretation by administrative agencies of their
own rules unless there is an error of law, abuse of power, lack of jurisdiction or grave abuse of
discretion clearly conflicting with the letter and spirit of the law.
With regard to the issue of the constitutionality of the must-carry rule, the Court finds that its resolution is not
necessary in the disposition of the instant case. One of the essential requisites for a successful judicial inquiry into
constitutional questions is that the resolution of the constitutional question must be necessary in deciding the case.
In Spouses Mirasol v. Court of Appeals, we held:
As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on
other grounds. The policy of the courts is to avoid ruling on constitutional questions and to presume
that the acts of the political departments are valid, absent a clear and unmistakable showing to the
contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of powers. This
ABS-CBN v. PMSI G.R. Nos. 175769-70 13 of 14
means that the measure had first been carefully studied by the legislative and executive departments
and found to be in accord with the Constitution before it was finally enacted and approved.
The instant case was instituted for violation of the IP Code and infringement of ABS-CBNs broadcasting rights
and copyright, which can be resolved without going into the constitutionality of Memorandum Circular No. 04-08-
88. As held by the Court of Appeals, the only relevance of the circular in this case is whether or not compliance
therewith should be considered manifestation of lack of intent to commit infringement, and if it is, whether such
lack of intent is a valid defense against the complaint of petitioner.
The records show that petitioner assailed the constitutionality of Memorandum Circular No. 04-08-88 by way of a
collateral attack before the Court of Appeals. In Philippine National Bank v. Palma, we ruled that for reasons of
public policy, the constitutionality of a law cannot be collaterally attacked. A law is deemed valid unless declared
null and void by a competent court; more so when the issue has not been duly pleaded in the trial court.
As a general rule, the question of constitutionality must be raised at the earliest opportunity so that if not raised in
the pleadings, ordinarily it may not be raised in the trial, and if not raised in the trial court, it will not be considered
on appeal. In Philippine Veterans Bank v. Court of Appeals, we held:
We decline to rule on the issue of constitutionality as all the requisites for the exercise of judicial
review are not present herein. Specifically, the question of constitutionality will not be passed upon
by the Court unless, at the first opportunity, it is properly raised and presented in an appropriate
case, adequately argued, and is necessary to a determination of the case, particularly where the
issue of constitutionality is the very lis mota presented.x x x
Finally, we find that the dismissal of the petition for contempt filed by ABS-CBN is in order.
Indirect contempt may either be initiated (1) motu proprio by the court by issuing an order or any other formal
charge requiring the respondent to show cause why he should not be punished for contempt or (2) by the filing of a
verified petition, complying with the requirements for filing initiatory pleadings.
ABS-CBN filed a verified petition before the Court of Appeals, which was docketed CA G.R. SP No. 90762, for
PMSIs alleged disobedience to the Resolution and Temporary Restraining Order, both dated July 18, 2005, issued
in CA-G.R. SP No. 88092. However, after the cases were consolidated, the Court of Appeals did not require PMSI
to comment on the petition for contempt. It ruled on the merits of CA-G.R. SP No. 88092 and ordered the dismissal
of both petitions.
ABS-CBN argues that the Court of Appeals erred in dismissing the petition for contempt without having ordered
respondents to comment on the same. Consequently, it would have us reinstate CA-G.R. No. 90762 and order
respondents to show cause why they should not be held in contempt.
It bears stressing that the proceedings for punishment of indirect contempt are criminal in nature. The modes of
procedure and rules of evidence adopted in contempt proceedings are similar in nature to those used in criminal
prosecutions. While it may be argued that the Court of Appeals should have ordered respondents to comment, the
issue has been rendered moot in light of our ruling on the merits. To order respondents to comment and have the
Court of Appeals conduct a hearing on the contempt charge when the main case has already been disposed of in
favor of PMSI would be circuitous. Where the issues have become moot, there is no justiciable controversy,
thereby rendering the resolution of the same of no practical use or value.
ABS-CBN v. PMSI G.R. Nos. 175769-70 14 of 14
WHEREFORE, the petition is DENIED. The July 12, 2006 Decision of the Court of Appeals in CA-G.R. SP Nos.
88092 and 90762, sustaining the findings of the Director-General of the Intellectual Property Office and dismissing
the petitions filed by ABS-CBN Broadcasting Corporation, and the December 11, 2006 Resolution denying the
motion for reconsideration, are AFFIRMED.
SO ORDERED.
Austria-Martinez, Chico-Nazario, Nachura, and Leonardo-De Castro, JJ., concur.